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This article applies to:

  • Product: Accounting CS Client Access
  • Subject: Payroll checks,Setup

Set up and manage independent contractors

Keeping correct records for independent contractors helps with tax compliance and smooth business operations.
Manage independent contractors in your payroll system to:
  • Track hours and pay for independent contractors
  • Process 1099-NEC forms
  • Include contractor data in payroll reports

Step 1: Set up payroll items

For nonemployee compensation:
  1. Select
    Setup
    , then
    Payroll Items
    .
  2. Select
    Add
    .
  3. Enter item details.
  4. In the Calculation section, choose
    Nonemployee compensation
     from the
    Special type
     dropdown.
  5. Select
    Enter
     to save.
For reimbursements (if needed):
  1. Follow the previous steps 1-3.
  2. Select
    Nonemployee reimbursement
     from the
    Special type
     dropdown.
  3. Select
    Enter
     to save.

Step 2: Add an independent contractor

  1. Select
    Setup
    , then
    Employees
    .
  2. Select
    Add
    .
  3. Enter contractor information.
  4. Set
    Type
     to
    Independent Contractor
     in the Identification section of the Main tab.
  5. Go to the
    Payroll Items
     tab.
  6. Mark the nonemployee compensation items.
  7. Add any deductions or contributions.
  8. Select
    Enter
     to save.

Step 3: Process Form 945 (if needed)

Independent contractor payroll check amounts are excluded from Form 941/944 and display on Form 945. Follow these steps to include amounts properly on Form 945.
  1. Select
    Setup
    ,
    Clients
    , then the
    Payroll Taxes
     tab.
  2. Make sure
    Do Not File
     isn't marked for Form 945.
  3. Select
    Enter
     to save.
  4. Select
    Setup
    ,
    Employees
    , then the
    Payroll Taxes
     tab.
  5. Mark
    Backup withholding
     if necessary.
  6. Select
    Enter
     to save.
  7. Process Form 945 as usual.

Step 4: Create and print checks

  1. Select
    Actions
    , then
    Enter Transactions
     or
    Enter Batch Payroll Checks
    .
  2. Enter payroll checks for the independent contractor.
  3. Print checks.

Step 5: Print 1099-NEC Forms

  1. Select
    Actions
    , then
    Process Payroll Tax Forms
    .
  2. Select
    1099-NEC
     for the
    Form Type
     and the correct year from the
    Year
     dropdown.
  3. Select
    Refresh
    .
  4. Select print options and print.
tip
If using Employee Self-Service, you can send 1099-NECs electronically by marking the checkbox during printing.

Step 6: Report new hires (California only)

  1. Select
    Actions
    ,
    Process New Hires
    , then
    California Independent Contractors
    .
  2. Select the contractors to report.
  3. Select
    Preview Selected
     to preview the information contained in the new hire files.
  4. Select
    Create File
     to create the new hire file.
  5. Select
    Manage Files
     to remove information from the file as needed.